Proposed GOP Bill to Cut Home Mortgage Interest in Half, Limit Other Deductions
by David Ellis
on Thursday, November 2nd, 2017 at 10:05am.
House Republican leaders proposed a tax bill Thursday that would reduce the popular mortgage interest deduction by 50%, for some households. Currently, homeowners can deduct interest payments for mortgage loans up to $1 million. With the newly proposed bill this deduction would be preserved for existing mortgages, but would limit new purchase loans up to $500,000. In addition, the rule allowing homeowners to deduct property taxes from their taxable income would be capped at $10,000. If passed, the bill will most assuredly have a negative impact on housing and real estate nationwide. In a statement, National Association of Realtors President William Brown said, "Eliminating or nullifying the tax incentives for homeownership puts home values and middle-class homeowners at risk, and, from a cursory examination, this legislation appears to do just that."
The proposed bill would have the greatest impact on high-cost areas such as California and New York, and would have a limited impact on the St George market (with a median house price of $239,500), but the pain would certainly be felt locally by those paying property taxes on high-end homes, as well as buyers planning to finance a high-end home purchase in the St George area in the future.
In an effort to reduce the tax burden for middle income families, the standard deduction will nearly double from $12,000 to $24,000 for married couples filing jointly and the child tax credit would increase from $1,000 to $1,600, among other measures.
While the bill would add $1.5 trillion to the national debt over 10 years, due largely to corporate tax cuts, the Republican leaders believe savings to corporations will lead to a surge in job creation and overall economic growth.
The mortgage deduction has long been in place as an incentive of home ownership. As a Realtor and homeowner, I feel any attempts made by the government to discourage home ownership is a mistake. With Trump saying he'd like to see the bill become law by Christmas, there will certainly be a fight on both sides of the isle in the coming weeks.